If you listened to any Kevin Hassett interview this weekend, he explains spending as a function of people "feeling" their jobs are secure. While he is correct in nominal dollars, the question interviewers should have asked was relative to inventory. More money, less items...
Before I listen, I'll call out Ambiguity Aversion? When the future is uncertain, people chose any action over inaction. (It stems from a need to have control over one's personal situation.)
It makes me wonder whether doom spending is less about consumption and more about time. If the future feels blurry, the present becomes more valuable. In a strange way, people may be spending not because they are optimistic, but because they are discounting tomorrow more heavily than usual.
I think recent spending trends are more an anticipatory reward system where self-regulation falters.
Humans are programmed to make irrational choices. The hyperbolic discounting of time is definitely a factor bounding their availability of knowledge as much a basic loss aversion.
Same mechanism that hurts investing and health coverage... present bias overriding any sense of delayed gratification.
I am very grateful to Dr. Abdullah Al-Bahrani and Jonathan Marx for creating such a thoughtful space to talk about economics, uncertainty, and the messy world of data we all try to make sense of.
I truly enjoyed the conversation and the opportunity to share part of the work we are doing at the Hibbs Institute.
Thank you again for the invitation and for the great work you are doing through Decode Econ.
Great story this week, and I appreciate getting to hear different voices. It's always fun to see how people approach things differently, but a lot of the underlying motivation is the same.
If you listened to any Kevin Hassett interview this weekend, he explains spending as a function of people "feeling" their jobs are secure. While he is correct in nominal dollars, the question interviewers should have asked was relative to inventory. More money, less items...
Before I listen, I'll call out Ambiguity Aversion? When the future is uncertain, people chose any action over inaction. (It stems from a need to have control over one's personal situation.)
Ambiguity Aversion is a more articulate version of what I called Doom Spending. Amazing how much we need to feel in control.
It makes me wonder whether doom spending is less about consumption and more about time. If the future feels blurry, the present becomes more valuable. In a strange way, people may be spending not because they are optimistic, but because they are discounting tomorrow more heavily than usual.
I think recent spending trends are more an anticipatory reward system where self-regulation falters.
Humans are programmed to make irrational choices. The hyperbolic discounting of time is definitely a factor bounding their availability of knowledge as much a basic loss aversion.
Same mechanism that hurts investing and health coverage... present bias overriding any sense of delayed gratification.
I am very grateful to Dr. Abdullah Al-Bahrani and Jonathan Marx for creating such a thoughtful space to talk about economics, uncertainty, and the messy world of data we all try to make sense of.
I truly enjoyed the conversation and the opportunity to share part of the work we are doing at the Hibbs Institute.
Thank you again for the invitation and for the great work you are doing through Decode Econ.
Great story this week, and I appreciate getting to hear different voices. It's always fun to see how people approach things differently, but a lot of the underlying motivation is the same.